Gary Keller breaks down economy’s ‘period of discontent’ 

It's not easy to put a positive spin on the current state of the U.S. economy and its wider impact on the real estate industry — even for Gary Keller, who warned the audience at KW's 2026 Mega Agent Camp in San Antonio today that the economic presentation he'd planned wasn't necessarily "going to be fun," and in fact was "very painful" to prepare for.

"Buyers think it's 2008, sellers think it's 2021," the KW co-founder and executive chairman observed from the stage on August 18. 

On employment: The latest labor market data put the unemployment rate at 4.1%, and below 5% is typically "considered fantastic," Keller said. But employers are adding fewer jobs, participation in the workforce is falling, consumers are spending less and wage growth is struggling to keep pace with inflation. "All of that adds up to that period of discontent."

People with lower incomes are navigating this economic reality very differently from high earners, Keller added. "You have two different experiences going on in America right now," he said.

On new homes: Nationally, existing-home prices have topped new-home prices — and that's a "challenge," according to Keller.

"That's not the way it's supposed to be," he said. "That's not nature."

The problem began when new home starts "took a horrible dive" during the Great Recession, Keller noted, and while there was a rebound in the 2010s, new home construction is still lagging. That lack of inventory "gave rise to the existing home prices," he explained.

On inventory: It'll take years — and a lot of work — to fix the housing supply gap. "We need to have about four years at 1.7 million new home starts to make up for the inventory that was never built, in order to get back to some sort of a balance," Keller said.

On the 21st Century ROAD to Housing Act: The bipartisan housing package that became law in July is the first major piece of housing-related legislation passed in decades, and it has been widely applauded by industry advocates.

But its impact will take time. "The bill is primarily a supply-side measure, offering no direct funding for housing. Consequently, it's not going to alleviate immediate industry challenges at all," Keller said.

"Rather than mandating changes to local zoning or regulations — which, we would all love that — it relies on suggestions and incentives to encourage it."

On AI: When compared to the internet boom's impact on the economy, "the amount of money that's being poured into AI is staggering," Keller said. "You're talking about approximately $400 billion in the last two years that has been poured into AI."

But this demand is "driving up the prices of everything that goes into building AI and making it run," he said, adding, "This is very inflationary."

On the big reason to keep buying: "People ask me, 'Are you buying real estate?' I say, 'Yeah. Lots of it, actually,'" Keller said.

While many would-be homebuyers believe renting costs less than homeownership, Keller noted that renters aren't investing that money in a property. A mortgage, on the other hand, is "forced savings."

"What scares you is we have a generation that's not doing it, because they don't understand money and they don't understand real estate," Keller said in a nod to the affordability struggles facing first-time buyers. But people "should still be buying."

"It's for savings," he said. "If your income doesn't get better in 30 years, the home will be paid off, and it'll be cheaper than renting."